I asked him if they weren’t shooting themselves in the foot. He responded: “I can either fire everyone now or in a few years, what would you chose?”.
I’m glad I don’t have to take this kind of decision.
This is the entirety of the problem with modern capitalism, isn't it? There is no way to account for long term losses that stakeholders can put value on. Just look at what we've done to the environment.
Market grows with more adoption and you become a leader in the paricular field.
Why do Alstom and Siemens feel such pressure to merge given their Chinese competition? Is it harder for each of these firms to compete individually against a larger company? My understanding of economics is limited.
In the US, we hear all the time about how competition is good in markets because it keeps prices down, which makes sense at a surface level. But articles like this seem to tell a different story: that there are economic forces causing major industry consolidation, which in turn hurts competition and (I'm guessing) increases inequality.
For these two companies merging might make sense... Certainly they wouldn't have to compete against each other if they did -- that's profit..
What economic forces encourage companies to compete with each other instead of simply merging? I guess put another way: if maximizing profit is the ultimate goal of capitalism, and more profit can be had by merging, why doesn't everyone just merge? Are there market forces that encourage competition outside of government intervention (i.e. antitrust)?
If you believe that you have an edge over your competitor, then merging with them isn't the profit-maximizing move. Instead, you could just outcompete them and own the whole market, rather than only part of the market leader.
But I would imagine that scaling you train manufacturing by 2x is hard.
Investing as much in rail infrastructure as China currently does wouldn't hurt either.
But I'm curious as to the balance between ensuring competition and giving advantages to local European companies, by letting them merge..
Curious, would this merger have been allowed in the US?
Doubtfully - putting together 2 weak and broken companies usually just results in them becoming 1 bigger weak and broken company, not stronger.